Monsanto Profit Growth to Slow Next Year on Lower Corn Prices

Monsanto Co., the biggest developer of genetically modified crops, said profit in fiscal 2015 may increase less than in recent years because lower corn futures will probably constrain its ability to raise seed prices.

Earnings-per-share in the fiscal year that begins Sept. 1 will increase by between 10 percent and a "mid-teens" rate, Chairman and Chief Executive Officer Hugh Grant said today. That’s "a little bit lower" than prior years, when "mid-teens" growth was targeted, because of declining grain prices and less corn planting, he said.

"It’s meaningful growth but it’s not realistic," Grant said on a webcast from the company’s Whistle Stop presentation in Huxley, Iowa, that was closed to media.

Monsanto will raise average prices for corn seed, its largest business, by a "mid-single digits" percentage, less than the 5 percent to 10 percent price gains targeted in prior years, Chief Operating Officer Brett Begemann said on the webcast. The price increases will come from replacing about 20 percent of older seed varieties with new offerings, he said.

Monsanto earnings are expected to increase 17 percent next year to $6.13 a share, from $5.22 in the current fiscal year, according to the average of 25 analysts’ estimates compiled by Bloomberg.

The St. Louis-based company plans to issue its formal earnings forecast in October, Grant said.